Standard Oil Company of California v. Perkins

• Decision Date: 11 July 1968
• Docket Number: No. 19436.,19436.
• Citation: 396 F.2d 809
• Parties: STANDARD OIL COMPANY OF CALIFORNIA, a corporation, Appellant, v. Clyde A. PERKINS, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

396 F.2d 809 (1968)

STANDARD OIL COMPANY OF CALIFORNIA, a corporation, Appellant, v. Clyde A. PERKINS, Appellee.

No. 19436.

United States Court of Appeals Ninth Circuit.

November 2, 1967.

As Amended on Denial of Rehearing July 11, 1968.

Pillsbury, Madison & Sutro, Eugene M. Prince, Francis R. Kirkham, H. Helmut Loring, Richard J. MacLaury, San Francisco, Cal., Koerner, Young, McColloch & Dezendorf, (now McColloch, Dezendorf & Spears), Wayne Hilliard, Portland, Or., for appellant.

Roger Tilbury, Portland, Or., Bonyhadi & Hall, Ernest Bonyhadi, Bruce M. Hall, Portland, Or., of Rives & Schwab, for appellee.

Before HAMLEY, KOELSCH and DUNIWAY, Circuit Judges.

KOELSCH, Circuit Judge.

Clyde A. Perkins brought this suit against the Standard Oil Company of California to recover treble damages for injuries allegedly resulting from Standard's price and price-related discriminations in the sale of gasoline and oil in violation of Section 2(a), (d) and (e) of the Clayton Act, as amended by the Robinson-Patman Act.

At the conclusion of a protracted trial, the jury rendered its verdict for Perkins and against Standard assessing damages in the total sum of $336,404.57.¹

The court trebled this award and allowed Perkins $289,000 as an attorney's fee (15 U.S.C. § 15) for a total of $1,298,213.71. Standard has appealed.

Perkins started in the gasoline and oil business during 1938 as the proprietor of a single service station in the State of Washington. Over the years he acquired many more stations throughout that State and a number in Oregon. In addition, he became a wholesaler in this same territory. There he operated several bulk storage plants and sold gasoline to other wholesalers, to retailers, and to commercial users. In 1945 Perkins, together with two other dealers whose operations were similar to his own, entered into the first of a series of so-called "consignment supply contracts" with Standard, under which Standard sold them all the gasoline and oil which they required. None of the three was interested in the business of any other.

During 1952 Perkins organized two corporations — Perkins of Oregon and Perkins of Washington — to whom he respectively sold his gasoline and oil business and leased all his bulk plants and most of his service stations. The corporations continued to carry on a wholesale business but sublet all service stations, save for one operated by Perkins of Washington in Vancouver, Washington. Standard knew of these transactions but did not negotiate sales contracts with the corporations or terminate the existing one with Perkins. It continued to supply the gasoline and to bill Perkins.

On December 2, 1957 the Perkins businesses were sold to a major oil company and the contract with Standard was terminated.

Fifteen months later, on March 2, 1959, Perkins filed this suit. As ultimately submitted to the jury it comprised three claims: the first, that of Perkins individually; the second, that of Perkins of Oregon; and the third, that of Perkins of Washington.

Broadly stated, Perkins' contention was that throughout a period extending from March 1, 1955, through December 1957, he and the two Perkins corporations sustained injury to business and property because (a) Standard had charged the Signal Oil & Gas Co. and the operators of Standard's Chevron and Signal Service Stations (hereinafter referred to as "Branded Dealers")² less for the same grade and quality of petroleum products than Standard had charged him and the two Perkins corporations; (b) Standard had paid the Branded Dealers, but not him and the two Perkins corporations, for services and facilities furnished by the Branded Dealers in connection with the sale of Standard's products; and (c) Standard likewise furnished said Branded Dealers valuable services not rendered to him and the two Perkins corporations.³ He did not contend that his alleged injury resulted from his inability to compete with Standard itself but rather that his injury stemmed from Standard's price favoritism to Signal and the Branded Dealers, which favoritism impaired and destroyed competition between Perkins and certain others of those who sold Standard's products.⁴

The Branded Dealers purchased gasoline and oil from Standard which they in turn sold at retail. With respect to them, Perkins' story is quickly told. Because of Standard's favoritism and discrimination they were able to and did offer lower prices and better services and facilities than Perkins in marketing at retail.

Signal Oil & Gas Co., like Standard, featured in this litigation exclusively as a supplier. It assertedly passed on to its customers a large part of the more favorable price that it received from Standard and thus enabled its customers (some of whom were retailers and others jobbers) to undersell Perkins.

Section 2(a) of the Act, in terms, limits the distributing levels on which a supplier's price discrimination will be recognized as potentially injurious to competition. These are: on the level of the supplier-seller in competition with his own customer; on the level of the supplier-seller's customers; and on the level of customers of customers of the supplier-seller.⁵

The record in this case manifests that a substantial part of the damages assessed against Standard with respect to each claim was necessarily rested upon the marketing of gasoline and oil by a corporation known as Regal Stations Company. The conclusion is also inescapable that Regal was not a customer of a customer within the purview of Section 2(a) of the Act.⁶ It follows that the detrimental effect Regal exerted upon competition is not attributable to and would not support an award of damages against Standard; that the whole verdict is tainted, since the amount reflected in it by Regal's conduct cannot be ascertained; and that the judgment must be reversed and a new trial had.

Inasmuch as the case must be returned to the district court and tried anew, we believe it appropriate to briefly comment upon several of Standard's remaining points.

The factual issues of whether or not the two Perkins corporations, prior to the commencement of this action, had assigned their claims to Perkins and whether the assignments were valid need not be relitigated. These issues were the subject of special interrogatories which the jury answered favorably to Perkins. They involved matters that were entirely distinct and separable from the claims themselves; they appear to have been fully developed by the evidence; and they are in no way affected by the error which requires a reversal of the judgment.⁷ On the new trial the fact of the assignments will be deemed established.

The trial judge's ruling, that the relevant four year statute of limitations had not operated upon the assigned claims to bar Perkins' right to maintain suit on them, was correct.

We agree with Standard that if Perkins first asserted the claims on September 12, 1963 when, at the direction of the trial court he supplemented his contentions appearing in the pretrial order with the fact of the assignments, then his right to prosecute a suit on the claims had expired. The claims accrued not later than December 1957, and filing of the complaint in September 1959, would not have tolled the statute. "An amendment setting up such new * * * cause of action will not relate back to the date of the original petition, but will be governed by its own date, and if the bar of the statute of limitations or a bar to the right to maintain such new cause of action has intervened, the new cause of action must fail." Salyers v. United States, 257 F. 255 (8th Cir. 1919). In the case last cited, the pleadings clearly disclosed that plaintiff's amendment to the complaint introduced into the suit a new claim upon which suit was barred. Here they do not. To the contrary, this record demonstrates with equal clarity that the suit from the time of its commencement included these claims. True, Perkins did not assert the claims as assigned claims, but he did make clear from the outset that he was asserting ownership of all property and property rights injuriously affected and for which he was seeking to recover damages. The supplement merely separated several claims initially improperly commingled into their component parts.

Neither did the court err in submitting to the jury Perkins' claims based upon Standard's alleged Section 2(d) and 2(e) violations. There was some evidence that Perkins and the Perkins corporations operated some service stations and, to that extent, Standard was obliged, under those sections, to make the same proportional payments and allowances to Perkins for such items as service station rest room maintenance, painting of service stations, advertising and credit card privileges, as it did to the Branded Dealers. We perhaps should add, a seller's obligation extends only to customers who compete with each other on the same functional level of distribution. Tri Valley Packing Ass'n v. F.T.C., 329 F.2d 694 (9th Cir. 1964). And a customer who functions both as a retailer and a wholesaler is entitled to receive proportionately equal treatment with respect to payments and services that the seller gives a competing retailer; but he is not entitled to such allowances with respect to his wholesale business as well.⁸

Standard's assignments also concern the trial court's rulings on evidence and the giving of instructions relating to damages. A brief discussion of several is warranted.

It will be recalled that the verdict comprised three claims: the claim of Perkins individually, and that of Perkins of Oregon, and Perkins of Washington.

With respect to Perkins' own claim the court, over Standard's objection, permitted him to show on the issue of damages that the Perkins corporations did not pay him 1(a) an agreed brokerage fee for securing their gasoline; (b) rentals on leases of service stations and other property, and (c) other indebtedness; 2 that he was unable to collect...